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Equivalence of Auctions and Posted Prices

  • Kultti, Klaus

We determine the equilibrium in two transaction mechanisms: auctions and posted prices. Agents choose whether to participate in markets where trades are consummated by auctions or in markets where sellers post prices. We show that the selling mechanisms are practically equivalent. Previous studies have shown that auction markets emerge as a unique evolutionary stable equilibrium when compared to bargaining markets. Posted price market dominate bargaining markets similarly.

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File URL: http://www.sciencedirect.com/science/article/B6WFW-45JC974-F/2/f0d064310db80a60ddb516164d845fd6
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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 27 (1999)
Issue (Month): 1 (April)
Pages: 106-113

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Handle: RePEc:eee:gamebe:v:27:y:1999:i:1:p:106-113
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  1. Wang, Ruqu, 1993. "Auctions versus Posted-Price Selling," American Economic Review, American Economic Association, vol. 83(4), pages 838-51, September.
  2. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-50, September.
  3. Lu, Xiaohua & McAfee, R. Preston, 1996. "The Evolutionary Stability of Auctions over Bargaining," Games and Economic Behavior, Elsevier, vol. 15(2), pages 228-254, August.
  4. Wang, Ruqu, 1995. "Bargaining versus posted-price selling," European Economic Review, Elsevier, vol. 39(9), pages 1747-1764, December.
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